“1st Circ. Revives Loestrin Pay-For-Delay Suit,” Law360

February 22, 2016

Warner Chilcott will have to face claims it paid drugmakers to delay producing a generic version of its contraceptive Loestrin in multidistrict litigation after the First Circuit on Monday found that noncash settlements can be subject to antitrust scrutiny.

Wholesalers, end payors and others alleged that Warner Chilcott Co.'s agreement with Watson Pharmaceuticals Inc. — both of which are now owned by Actavis Inc. — and another with Lupin Pharmaceuticals Inc. amounted to a scheme to keep generic versions of the drug out of the market.

U.S. District Judge William E. Smith in September 2014 tossed their claims, saying that under a U.S. Supreme Court decision in Federal Trade Commission v. Actavis Inc., any so-called reverse payments over the drug would have to be in cash. The payments exchanged between Warner and the generics makers were certain licensing deals and agreements to not market the drug under certain circumstances, court records show.

But the First Circuit found Monday that the district court's assessment of the Actavis precedent was too strict, and that noncash payments would have also been contemplated, according to the ruling vacating Judge Smith's decision and remanding the case.